The Following Values Have Been Computed for Various Independent Projects

question 340

Multiple Choice

The following values have been computed for various independent projects which have a required payback period of 3 years, a required discount rate of 14.5 %, and a required accounting return of 11 %. Which one of these values indicates an accept decision?

• A) Net present value of ($1,200).
• B) Accounting rate of return of 10 %.
• C) Profitability index of 1.02.
• D) Internal rate of return of 13.6 %.
• E) Payback period of 3.2 years.

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Definitions:

Negligently

Acting with a lack of proper care or attention, resulting in harm or injury to another person or property.

Relative Capital Contributions

The contributions, often in the form of money or assets, that partners make relative to one another in a partnership or investment setting.

Dissolved

The process of legally disbanding a corporation or partnership, effectively ending its existence.

Errand Runner

A person or service engaged to perform small tasks or deliveries.